The Mortgage Market Show Signs of Life!

by Mark Johnston

There were only 43,000 or so mortgages approved in February 2011, way down from the 80,000 or so that are seen to be required for a stable housing market.

First time buyer’s campaign website pricedout.co.uk suggested that “conditions were leading to a wider gap between home owners and prospective buyers”.

However the recent lending figures from the council of mortgage lenders (CML) show welcome signs of life in the UK mortgage market, despite the uncertainty in the euro zone. Although it remained far from signalling a housing boom.

The figures showed that the number of loans approved in August 2011, to first time buyers totalled 19,000, worth £2.4 billion which is an increase over July 2011 of 5% by number and 4% by value.

These figures also showed that lenders advanced 33,000 loans in August 2011 to movers, worth £5.5 billion; this is also an increase over July 2011 of 8% by number and 10% by value.

Lending to both first time buyer and movers is the highest it has been in over a year.

Nevertheless, first time buyers that are managing to get on to the property ladder are putting down a 20% deposit on average, which is slightly down on a deposit in the same period last year.

The lending criteria for first time buyers and movers showed little change, but the continuing decline in borrowing costs meant that their monthly mortgage payments dropped to 9.4% of their income, this is the lowest proportion since monthly records began in 2002.

Moneysupermarket.com also released data showing that fixed 2 year mortgage deals had reached a record low.

Despite these upbeat figures from the council of mortgage lenders (CML), a survey of surveyors claimed that the fears over UK and European economies were knocking confidence in the housing market as a whole.

Peter Maskell, director of the Sussex based estate agents Brock Taylor suggests that “talk of recovery sounds rather premature, average house prices still have some way to go to regain the levels of a year ago”.

It suggested that fewer home owners were putting their properties up for sale in August than in earlier months, this was due to fragile consumer confidence.

The UK house prices in August 2011 remained 1.3% lower than in August 2010, according to the government own house price survey.

Various other surveys of the housing market have shown that house prices have remained static in recent months.

The Halifax described house prices as “lacking genuine direction”.

The department for communities and local government (DCLG) survey should that house prices had actually fallen by 0.3% in Wales and 1.2% in England compared with a year ago.

The royal institution of charted surveyors (RICS) survey has shown that a large proportion of surveyors surveyed expect to see prices fall more within the next 3 months.

In conclusion with those moving house now paying a record low proportion of their income in mortgage interest, it is clear that the low rate environment is continuing to benefit borrowers. This is despite the persistence of a gloomy backdrop in the wider property market and economy.



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